Attorney Jude Witkowski guides you through the basics of bankruptcy in the state of Wisconsin.
Jude Witkowski
Jude@Seifertsmall.com
Bankruptcy Basics: What You Need to Know
Life happens—and sometimes that means debt piles up faster than you can manage. Between inflation, unexpected bills, and job changes, it’s no wonder more people are looking at bankruptcy as an option. While the word bankruptcy might sound scary, it’s actually a powerful tool that can give you a fresh financial start.
Let’s break it down.
Why Bankruptcy Exists
Bankruptcy isn’t just a “last resort.” It’s part of our legal system designed to help people who are overwhelmed with debt. The goal is simple: give you a second chance to get back on your feet.
There are two main types of bankruptcy most individuals file: Chapter 7 and Chapter 13.
Chapter 7: The Fresh Start
Chapter 7 is often called “liquidation bankruptcy.” Here’s how it works:
- Who qualifies? You may qualify if your household income is below your state’s average.
- What debts go away? Credit cards, medical bills, and other unsecured loans.
- What debts don’t? Student loans, certain taxes, and secured debts like mortgages or car loans.
With Chapter 7, you’ll either:
- Keep your property and continue payments,
- Pay off the debt in one lump sum, or
- Give the property back to the creditor.
At the end, most of your dischargeable debts are wiped clean. The downside? It will appear on your credit report, which can affect future borrowing.
Chapter 13: The Repayment Plan
Chapter 13 is known as “reorganization bankruptcy.” Instead of wiping out debts immediately, it sets up a repayment plan that lasts 3 to 5 years.
- Who qualifies? People with higher incomes, or those who have filed Chapter 7 in the last 8 years.
- How it works: You make monthly payments to pay off some or all of your debt. Whatever isn’t fully paid off by the end of the plan may be discharged.
This option can be helpful if you want to keep your property but need more time to catch up on payments.
Bottom Line
Bankruptcy doesn’t mean failure—it means a fresh start. Whether through Chapter 7 or Chapter 13, it’s a legal way to relieve overwhelming debt and move toward financial stability.
If you’re struggling, the most important step is to talk with an attorney who can help you decide which option is right for you.
To discuss your bankruptcy options further with an attorney, contact us today!